Businesses get new finance option for energy efficient improvements

The San Diego City Council revived a program Tuesday to allow commercial property owners to finance energy and water efficiency improvements after a four-year, regulator-induced coma.

The program, called Property Assessed Clean Energy, allows commercial property owners, including owners of multifamily apartment buildings with four or more units, to get privately backed loans to buy insulation, energy efficient appliances, solar panels, and water efficient fixtures and repay the loans on their property tax bills. The payments stay with the property, and not the business, reducing the risk for the building owner.

“It’s going to create a lot of jobs, and at the same time knock down energy bills,” Mayor Jerry Sanders said.

The program was born in California four years ago, and Mayor Jerry Sanders put the program into action right away, primarily for residential customers.

Then federal regulators
jumped into the fray
. Ed DeMarco, acting chief of the Federal Housing Finance Administration, which regulates lending giants Fannie Mae and Freddie Mac, sent a letter spiking the program. He said that by putting the loans on property tax bills, repayment of the loan would move ahead of repayment of mortgages in the event of a default.

California cities and counties spent the next several years trying to find a way to work around the federal objections.

Early this year, the Western Riverside County Association of Governments
launched a version
of the financing and made it available to all homeowners, but with the mandate that homeowners with loans backed by Freddie Mac of Fannie Mae would have to pay off the loans when the house was sold.

The program in San Diego avoids federal objections by focusing on commercial properties which typically do not have financing from Freddie or Fannie. The city is hoping to launch a program for homeowners, possibly by partnering with the Western Riverside association, said
Eric Engelmen
, Sanders’ policy adviser for energy.

The San Diego City Council approved the program Tuesday, but it's not quite ready. City Attorney Jan Goldsmith will take the issue to court to pre-empt any law suits, Engelman said. The court process should be over by early next year.

In the meantime, commercial property owners interested in the program can contact
Figtree
, the private lender behind the program, and get the paperwork started, Engelman said.